Aldi the Underdog identifies the Place

The Place component of the marketing mix includes recognising where the product or service will be sold.

aldo squeezes profitsAldi keeps its store formats easy to cut-off waste and keep expenses down. This implies Aldi can concentrate on offering its customers lowest possible prices for its products. When considering new store locations, Aldi takes into account:

  • The number of people visiting an area as well as the demographic of the area – for example, the population of the area should be more than 30,000 people
  • The position of store – Aldi focuses on edge of the town centre locations with good visibility from a main road and not too much competition
  • aldi car parksThe accessibility of the store and its public transport links
  • The number of parking spaces available

Aldi has refined its business plan throughout the years to help keep those costs to a great degree lower guaranteeing an expanded circulation.

The insignificant item extend, useful store configuration and shortage of fleeting advancements other than the “Exceptional Buy” implies it is the straightforward no-frills distribution of markets.

aldi no boxes

An Aldi spokesperson said: “We’ve eliminated all costly extras and overheads by selecting only the best products in each category, displaying products in reusable crates and not giving out plastic bags, which encourages customers to recycle”.

“We concentrate on selling our select range of exclusive brands rather than spending money on customer loyalty programs or expensive point of sale displays.”

aldi rewards

Aldi picks prime geographic areas, to guarantee it is effectively available. Stores regularly seem near to the next leading markets, yet outside of the occupied with strip malls, and have car parks, allowing for conveniences for consumers.

aldi on the rise

Aldi once seen as the underdogs of the supermarket chains are quickly becoming a driving force within the supermarket industry, setting benchmarks and global standards abroad.

Whilst the bigger supermarkets were traditional the price drivers Aldi is starting to have a positive effect for the consumer. Aldi’s target market is more refined and for the “Everyday Aussie”, their strategically placed stores, on the out skirts of city centres providing the link between distribution and consumption, making them a more attractive superstore.

Whilst Woolworths and Coles still have a major consumer pool, we are seeing changes in the way consumers receive and perceive the drivers in this industry.

*multiple source have been used throughout this blog, more information can be examined on the following links.

http://ocw.unican.es/ciencias-sociales-y-juridicas/setting-up-businesses/exercises-1/case_study_3-1.pdf

https://www.youtube.com/results?search_query=aldi+distribution+strategies

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14 thoughts on “Aldi the Underdog identifies the Place

  1. Aldi certainly have used a low cost marketing approach to promote their business in comparison with other supermarkets such as Woolworths and Coles. You don’t see them advertising on television but you do see their catalogues widely available, especially when they’re having a targeted sale such as on snow gear or beach gear. As suggested in Iacobucci (2013), consumers still like to browse through catalogues when determining what to purchase. Aldi’s main form of promotion is through this avenue and it’s highly effective for their brand and less costly than other forms of media advertising, which fits with their low cost approach. Price is also a very big attractor to where people shop and many people have switched to doing their weekly shop at Aldi over shopping at Coles and Woolworths. Feedback suggests that weekly food shopping bills are significantly lower when buying from Aldi whilst the food quality is just as good. When you’ve got hungry teenagers, this is a huge drawcard to entice you to change your shopping practices.

    Liked by 1 person

    • Price is definitely a big attraction. I have seen the low cost, no frills approach and think the prices are definitely cheaper. I actually like the fact that there aren’t 50 different types to toothpaste… or tissues… or tomato sauce. A small range of good quality products at a good price. I think it is a great strategy.

      The distribution channels would be very streamlined and it goes all the way from the manufacturers to the consumer. I think Aldi is definitely onto something.

      As a side note, I think you also brought up an interesting point about snow gear and beach gear. I know my wife has gone to Aldi to get some advertised camping equipment…. only to walk out with the weeks shopping as well.

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  2. When you talk about distribution channels, you can also talk about the spread of power within those channels. Aldi clearly have a power within their distribution channel as the manufactures they deal with have to ensure that their packaging is optimal for Aldi stores displays. As you mentioned the Aldi model is based on low cost and efficiency, so the product isn’t unpacked and placed on shelves (like Coles or Woolworths. It is taken off the truck and placed on the shelves in boxes, so the manufactures have to adjust their packaging to meet the Aldi guidelines. I guess this would be ‘Reward Power’ as Aldi stock a large breath of product but limited depth, so the manufactures is guaranteed sales.

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  3. You cant talk about Aldi without referencing their focus on their own brands. They are clever in having comparable products to the main stores that are their own Aldi Brands. The packaging branding and labeling is all very similar to the more well known brands but just different enough to be legal. This must simply their distribution channels immensely. Also their ‘own brands’ extend beyond food and groceries but to hardware and clothing. Something the other supermarkets seem only to apply at scale i.e. in larger and larger stores where the hold stock. Aldi just rotate different items through their store. Tools one week, Ski gear the other. There is almost an anticipation of what will be in next Catalogue.

    Liked by 1 person

  4. compare to Aldi’s major competitors — woolworths or coles, Aldi located less stores that may feel more difficult to reach their customers. But Aldi pays more efforts on the quality of products and packaging. good quality products, good price products, and something different from others, will engage customers in a big way. however, what we seen with Aldi is most of their stores are actually stand-alone stores, or outside of big shopping centres, so as a result those types of stores generally impact the independents more. if Aldi could fix the problem of independence, and locate more store alone west and south Australia, more customers in local place will be engaged.

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  5. Aldi runs a totally different busiess mould comparing to Woolies and Coles. We can easily find the majority of the products in Aldi are private labels, which are marked at lower price comparing the branded products. Moreover, Aldi focuses on the quality of their products as the priority. Please refer to below the link of the requirements on the suppliers.
    https://corporate.aldi.com.au/en/corporate-responsibility/suppliers/
    In final words, Aldi provides quality products with lower prices. It saves cost of running business in mutiple ways, eg: no shopping bags are freely provided when shopping at Aldi.

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  6. The Aldi business model is definitely one to be noted. Their strategic 4Ps especially in terms of pricing strategy, promotion and place have made them a strong competitor of the market leaders (Coles and Woolies), taking up to 8% market share. Low prices are an attractive marketing tool, alongside quality products give consumers a sense of assurance that their money is well spent, especially smart shoppers. Place (location) is very important and although I have often found Aldi stores in odd locations, I trust that there are many in high traffic locations making them visible to many. To make their business more cost efficient Aldi has plans to invest 70 million on a warehouse and distribution centre in SA, understanding the importance of supply chain management to the business model for the ordering, storage, handling and timely delivery of its products.

    http://www.abc.net.au/news/2015-03-05/aldi-threat-growing-for-coles2c-woolworths/6282558

    http://www.logisticsmagazine.com.au/news/aldi-plans-new-$70m-warehouse-and-distribution-cen

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  7. I think Aldi can be considered as a discount retailer. For consumers who traditionally shop at Coles and Woolworths, Aldi may be seen as a ‘middle market’. But I have read an article saying that Aldi is looking more fancy after launching posh new displays last month designed to attract higher income shoppers into their stores. At the front of the new shops, and at the forefront of the supermarket wars, will be fresh fruit and vegetables, which Aldi will use to attract the attention of passing shoppers.
    Also, last year, Aldi decided to construct two new Distribution Centres, in South Australia and Western Australia. The Distribution Centre is to act as the hub of Aldi’s store network and the construction is expected to be completed by October this year. Aldi hopes that the development of the Distribution Centres and stores under efficient and streamlined processes is integral to delivering the high quality products at low prices that their customers have come to expect.

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  8. Nice post and dear to my heart given my rant about “ColesWorths”.

    Their model of location is successful which is no mean feat given the “first mover” advantage that the big two have in site selection. The one criticism that has been levelled at Aldi is that although they have limited or mono product lines, sometimes they simply do not stock a product that consumers consider a staple. This would appear to be essential if they wish to appeal to customers who want to do their weekly shop in their stores. This may be behind the rollout of their new “trial” stores with more variety – particularly in fresh food. Greater distribution of product lines is intended to attract more “middle income” shoppers and, if successful, could well increase their market share.

    Liked by 1 person

    • That is a good point. I find that Aldi is not really a “weekly shop” type of place but more an “occasional shop”. The “ColesWorth” (good post BTW) definitely have the variety to provide the weekly shopper with their everyday needs. Aldi may have limited product lines but it would be interesting to know if the average spend would be bigger. I don’t shop at Aldi regularly but the trolley is pretty full when I do.

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  9. Thank you for share
    Germany’s Aldi is follow a simple business model in the world. Aldi store just has 1000 products are popular, and store almost all products are printed with Aldi exclusive label. Because the type of goods it sells not too much in Aldi, Aldi can product quality and prices strong control, and to simplify transport and handling, which can earn high margin.
    Now Aldi has more than 7,500 stores worldwide and annual sales of $ 35 billion.

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  10. It is an interesting blog for me. Aldi is a huge supermarket in Australia; their shop locations are not good as Coles and Woolworths; but they always provide car parks and their selection the location to be convenience for consumers who are coming by public transports. They tried hard to raise the awareness of customers to concern about environmental protection; not providing plastic bag. Sometimes when supplier lower the cost and not decorating the packaging of the product but the price will definitely become lower; price is always the most attractive for customers. Aldi did the best thing is that they sell things cheap but in a good level of quality. By contrast, Aldi runs their business different to the normal supermarket; they have their advantages on that.

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  11. Aldi has started to take over Woolworths and Coles customers with their different strategy. They have also knocked off Metcash’s IGA. They are smart on how to reduce their operational cost and following unconventional practices, such as:
    • There are no counter service departments; everything is packaged and everything is self-service.
    • Shelf-ready boxes with No shelving require means no stockboys to hire; product is wheeled in on pallets by forklift, unwrapped and quickly signed.
    • Selling different items, not only grocery items. This is like combining small Big W with Woolworths which give more shopping experience to the customers.

    Aldi product prices are very competitive too, a lot cheaper with the same product that are sold in Woolies or Coles. The quality of the products are also good.

    I start to think that Aldi is following Coles and Woolworths for their store location. There will be an Aldi store in the area where there are also Coles and Woolworths in the same area. Don’t you think? They are not afraid with their competitors because they know they have different strategy than them.

    http://www.smh.com.au/business/retail/watch-out-woolies-aldis-rapid-growth-could-open-the-door-for-others-20140212-32i11.html
    http://www.forbes.com/sites/thehartmangroup/2015/04/14/aldi-is-a-growing-menace-to-americas-grocery-retailers/
    http://www.news.com.au/lifestyle/food/why-do-australians-love-aldi-the-secrets-to-the-supermarkets-phenomenal-success/story-fneuz8wn-1227131533124

    http://www.news.com.au/video/id-NteG11cTpNSPTaeaE8UW2lGL78Ay3-wQ/ALDI-Aussie-Christmas

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  12. Thank forpost
    Germany’s Aldi is follow a simple business model in the world. Aldi store just has 1000 products are popular, and store almost all products are printed with Aldi exclusive label. Because the type of goods it sells not too much in Aldi, Aldi can product quality and prices strong control, and to simplify transport and handling, which can earn high margin.

    Like

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